Kota Kinabalu: The Sabah Government and Petronas have implemented a four-pronged strategy to increase local participation in the oil and gas sector, expanding the number of scope categories available to Sabahan vendors from 63 to 135.
"These mechanisms are intended to create a more enabling environment for Sabahan vendors while ensuring that market participation remains competitive, transparent and performance-based,” said State Industrial Development, Entrepreneurship and Transport Ministry Permanent Secretary Datuk Thomas Logijin in his presentation titled “Sabah OGSE Local Content Policy and Performance”.
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Thomas was among the invited speakers at the Oil and Gas Services and Equipment (OGSE) Conference and Exhibition Sabah 2026, held at the Sabah International Convention Centre, here, Thursday.
“The first pillar involves carving out specific work categories for Sabahan companies,” he said.
He said large oil and gas contracts had for many years been bundled into multidisciplinary packages, making it difficult for local vendors to participate due to financial capacity requirements and scale-related limitations.
“Under this approach, specific scopes of work are separated from larger tender packages and made accessible to qualified Sabahan companies.
“Where a scope can be delivered effectively by qualified local companies, it should not be unnecessarily consolidated into a package that favours larger external players,” he said.
He said the expansion from 63 to 135 scope categories has broadened the pool of opportunities available to local vendors across the oil and gas value chain.
The second pillar establishes financial and technical tender thresholds to give qualified Sabahan vendors the first right of refusal and a competitive advantage during commercial evaluations for contracts that fall within the specified limits.
“This measure creates a clear policy boundary for ring-fenced opportunities, signalling to the market that local capacity must be prioritised where it exists,” he said.
The third pillar encourages joint ventures between Sabahan companies and national or international players in specialised, high-technology and deepwater segments.
“Twelve strategic joint venture contracts have been awarded to Sabahan vendors through this approach.
“These are not passive or front-facing alliances. They are active operational joint ventures that mandate genuine technology transfer, local balance-sheet growth and hands-on skills development for our domestic workforce,” he said.
The fourth pillar is the Kinabalu Activity Outlook, now in its fourth edition covering 2026 to 2028, which provides Sabahan companies with multi-year visibility of upcoming exploration, development and production activities.
“The publication allows vendors to plan, invest in assets, strengthen technical capabilities and prepare for tender opportunities before they are formally issued.
“This transforms vendor participation from a reactive process into a more informed, structured and competitive preparation pathway,” he said.
Thomas also highlighted the Vendor Development Programme, a structured platform aimed at building specialised capabilities among Sabahan companies.
“To date, eight Sabahan vendors have graduated from the programme, while development efforts in three areas remain ongoing, covering life-raft services, fire truck services and liquefied petroleum gas cylinder maintenance,” he said.
He said the programme must continue to be targeted, practical and aligned with industry requirements as Sabah moves towards higher-value and more technically complex activities.
Thomas also pointed to the evolution of Sabahan participation since the signing of the Sabah-Petronas Commercial Collaboration Agreement, noting that vendors progressed from foundational support services in 2021 and 2022 to more technical areas such as engineering services and consultancy in 2023 and 2024, before breaking into sophisticated segments including engineering, procurement, construction and commissioning (EPCC), pipelines, terminal turnaround and marine operations in 2025.
“Sabah has proven that it can climb the value chain. Our responsibility now is to sustain the momentum, close the gaps and build a stronger and more competitive Sabahan oil and gas ecosystem,” he said.
